Standing Committee B

[Mr. Roger Gale in the Chair]

Energy Bill [Lords]

Clause 129 - Strategy for microgeneration

Brian White: I beg to move amendment No. 200, in
clause 129, page 102, line 6, after 'microgeneration', insert 'and dynamic demand control.'.

Roger Gale: With this it will be convenient to discuss the following:
 Amendment No. 201, in 
clause 129, page 102, line 12, at end insert— 
 '(2A) In drawing up the strategy or any revision of the strategy, the Secretary of State shall consider the role of dynamic demand control in— 
 (a) reducing fluctuations in demand for electricity, and so increasing stability and security of supply, 
 (b) creating a smoothing effect in electricity demand that facilitates the connection of high proportions of intermittent renewable generation, 
 (c) reducing the need for reinforcement of electricity networks, and 
 (d) reducing the cost of balancing the electricity system.'. 
Amendment No. 202, in 
clause 129, page 102, line 15, at end insert 
 'or produce products that would facilitate dynamic demand control'. 
Amendment No. 212, in 
clause 129, page 102, line 16, leave out subsection (4). 
Amendment No. 203, in 
clause 129, page 102, line 17, after 'microgeneration', insert 
 'and the installation of dynamic demand control measures'. 
Amendment No. 213, in 
clause 129, page 102, line 20, leave out from 'strategy' to end of line 21. 
Amendment No. 214, in 
clause 129, page 102, line 23, leave out 'new'. 
Amendment No. 204, in 
clause 129, page 102, line 24, after 'microgeneration', insert 
 'and the installation of dynamic demand control measures'. 
Amendment No. 205, in 
clause 129, page 102, line 28, at end insert— 
 '''dynamic demand control'' means the ability of a load or a microgeneration device to adjust its electricity consumption or output according to instantaneous power imbalances on the electricity grid, in order that the variability of demand is reduced;'. 
Clause 129 stand part. 
 New clause 2——Requirement for net metering for premises with microgenerating installations— 
 'After paragraph 1 of Schedule 7 to the 1984 Act, insert— 
 ''Net metering for premises with microgenerating installations
 1A (1) Electricity suppliers shall provide net metering facilities upon request to domestic or business premises which have microgenerating installations. 
 (2) The electricity meters shall be charged at the same tariff in both directions.''.'.

Brian White: I welcome you to our proceedings, Mr. Gale. When this Committee started its deliberations, which seems an eternity ago, we talked about security of supply. I made the point that we needed to look at the demand side as well as the supply side. It should come as no surprise to the Committee that I am going to bang on the same drum again. In the debate on clause 120, the Minister described micro combined heat and power as an important contributing factor to achieving our goals. I echo that. [Interruption.]

Roger Gale: Order. Settle down please.

Brian White: I also fully accept that clause 129 as currently drafted is flawed. I therefore welcome the draft Government amendment, which has been circulated and which addresses some of those flaws. We have to recognise the benefits of microgeneration. It can help not only in CO2 reduction, where it can displace 60 per cent. of efficient central generation, but with the introduction of new technologies in our manufacturing base. It is highly carbon efficient. I have already mentioned security of supply.
 Microgeneration is also helpful for affordable housing, which we have talked about in relation to the renewable heat obligation. It helps our competitiveness. Most importantly, it engages people in the debate where it matters—in their own homes. It therefore has a far more symbolic effect than many of the policy issues that we have debated in Committee. Microgeneration has a key role to play, so this is one of the key clauses in the Bill. That is why I am pleased that the Government have accepted that there is a role for microgeneration in the Bill. 
 I tabled amendments Nos. 200 to 205, and I assure my hon. Friend the Minister that they are probing amendments. I will not push them to a vote. My aim is to get the Government to look at dynamic demand technologies. They are the technologies of the future. Part of the microgeneration strategy should be to look at ways to use these technologies. 
 I did my fellowship with the Industry and Parliament Trust and with the now defunct Electricity Association. That involved going round the national grid looking at how it operates, how it balances electricity demand at any one time and how it deals with surges in electricity such as will occur at 5 pm today. The national grid has to deal with constant variations in demand every day. Much is done by prediction and by planning ahead. There is variability from minute to minute and even second to second that is not predicted and is balanced by running a few power stations at variable rates. They go up and down as the demand rises and falls. 
 There is a potential problem as we add more renewable capacity to the grid, which is not as constant as some other forms, and we introduce more variability into the system. That increases costs. Power stations that are balancing the grid at the moment by 
 turning up and down run well below capacity. It is estimated that around £80 million a year is spent on balancing the grid in that way. 
 There are an awful lot of power-hungry devices in our homes. The classic one is the fridge. Typically, a fridge will switch on its motor for about 15 minutes and then stay static for about three quarters of an hour. As it gradually warms up again, it will hit the trigger and then cool air will come in. If we could adapt that technology by detecting changes in the way in which the mains frequency varied, we could save power. One fridge would not make any difference, but a million fridges operating at the same time would start to do so. 
 A number of small measures such as that—which involve people making decisions, contributing and having ownership of the way in which they affect climate change—would make a major difference and get people on board to support the policies that we are advocating.

Robert Key: I am delighted to see you in the Chair, Mr. Gale. I do not know whether the hon. Gentleman is an electrical engineer. I am not, but electrical engineers have told me that changing our traditional system of running electric motors at free speed could make a dramatic difference to energy consumption. There is no limiter for the speed. Generally speaking, every electric motor that does anything runs at top speed all the time. Am I correct?

Brian White: That is my understanding, too. That is why I am saying that if, collectively, we put limiters on our domestic machinery, we could make a major difference. Each individual one would not make much difference, but across the whole country, dynamic demand management would make a major difference. The hon. Gentleman makes the point clearly. I am not an electrical engineer, but one of those people who used electricity, but did not manage it. The price of putting these controllers into an item such as a fridge is between £3 and £5, so for a very cheap investment, which would presumably be made when machines were built and bought—the effect would build over time—we could make a major saving in the £80 million that the national grid uses in keeping power stations inefficient and well below capacity.
 To make progress on this issue, the Government must set the framework. There must be a clear steer from them, because there is no argument for consumers to pick up those products or for manufacturers to make them. The Government have a role in setting out the strategy and the goals and encouraging the industry to implement the strategy. The industry could deliver it effectively. 
 At the risk of setting myself up to be ridiculed under the headline ''Fridges Save the Planet'', I believe that there is a danger that, because we cannot solve all the problems and because my proposal would make only a small contribution, we will reject it. The measure would be a small part of the overall solution, and I urge the Government to consider it and to go down the 
 route that I have described. They should consider it as a step forward. Collectively, we could make major inroads into the demand side of electricity use.

Laurence Robertson: I welcome you to the Committee, Mr. Gale.
 Clause 129, which concerns the strategy for microgeneration, was put into the Bill in another place. A few minutes ago, we were given a copy of the Government's preferred amendment, which I presume will be moved on Report. To be fair, we have not had a chance to read through it in detail or to consider it. I am therefore tempted to stick with clause 129 for now. It can, of course, be revisited. I would probably suggest that my hon. Friends do the same. 
 The hon. Member for Milton Keynes, North-East (Brian White) made his customary well informed and enthusiastic speech, highlighting the need to reduce demand. That would be a useful outcome of clause 129. It is also important to promote the clause because of the new concept that it represents. We have macro-management of the electricity system—to describe it crudely—but also the important concept of microgeneration. According to my brief, microgeneration is when each and every householder will no longer only consume energy, but will produce it. That will engender among householders an interest, which has not existed previously because for 30 years we have had uninterrupted supply. Whenever anyone, including me, has switched a light on, it comes on without a problem. However, that situation is changing so we need a strategy for microgeneration and a requirement for the Secretary of State to implement that strategy. 
 I have not had a chance to study the proposed amendment. The Minister will propose it in good faith and we will consider it in good faith, but for now, I support clause 129. It is an extremely important part of the Bill and future energy strategy. I welcome its presence.

Andrew Stunell: May I welcome you to the Chair, Mr. Gale? We strongly support the principle of the microgeneration strategy set out in clause 129. Like the hon. Member for Tewkesbury (Mr. Robertson), we have not had the opportunity to examine the detail of the draft, which technically is not available. However, I welcome the fact that the Government seriously intend to pick up the idea of the microgeneration strategy. Having been critical of the Government and of Ministers in this Committee for an apparently leisurely approach to urgent and pressing issues, I am delighted that that is not the case on this occasion.
 I shall briefly comment on the amendments proposed by the hon. Member for Milton Keynes, North-East. He introduced me to a new aspect of the situation, which is of great interest and I hope that the Minister will give an undertaking on it. The current waste and inefficiency, which is inherent in having a large and complex grid system with random generation and even more random consumer elements, 
 is difficult to manage and requires a good deal of money—some £80 million or £90 million a year—which could be better spent elsewhere. 
 The hon. Gentleman did not say much about new clause 2, which would insert a net metering requirement. I strongly support that concept and tabled similar amendments during the Utilities Bill—now the Utilities Act 2000. I hope that the Minister will be sympathetic to new clause 2 and will tell us that the working party on net metering, which has had different names over the past four years but has still produced no results, will produce evidence of progress. Perhaps he will guarantee that he will have something positive to say about that on Report. 
 Opportunities are being missed every day while the net metering requirement is not in statute. Estimates suggest that 1 million electricity meters are replaced every year as they come to the end of their economic life. They are replaced with the lowest cost item of basic metering equipment that can be purchased because the supply companies that own the meters, at least nominally, will retain them only for the next 28 days. We could all go home tonight and change our electricity supplier, and the ownership of the meter would change with it. Naturally, those companies have no commitment to installing anything more advanced or expensive than the most bog-standard meter. 
 A regulatory requirement for net metering would transform that position at a negligible cost to consumers or the electricity industry. The estimate I have had of the cost of an ex-works two-way net meter, compared with the bog-standard meter, is about £3 to £5 per item, which at 1 million units is £3 million to £5 million a year.

Brian White: One of the first results of Ofgem having to look at regulatory impact assessments and to carry out environmental impact assessments, was that it changed the rules on net metering boxes to bring the cost down to that level. Before that, it was suggested that meters should be industrial plant size, costing about £500 to £1,000.

Andrew Stunell: The hon. Gentleman is right. Three or four years ago when I visited meter manufacturers, they were tearing their hair out over the situation they faced. Because electricity suppliers required the cheapest item available, almost 100 per cent. of the manufacture of the electricity meters installed in this country was transferred to India, at the expense of jobs and production here.
 The more sophisticated meters—some costing £500 or £1,000, as the hon. Gentleman says, and which are required only in the most unusual, specialist circumstances, are now the only such product that can be manufactured in this country at a reasonable profit.

Alan Whitehead: Does the hon. Gentleman agree that in addition to ensuring that net metering equipment is installed, with which I thoroughly agree, there is also the issue of how electricity companies charge on the result of that metering? A genuinely two-way tariff—equality of
 charge in and equality of income out—is a key issue in the future of net metering. Does he hope, like me, that it will be part of the strategic view of micro-generation that the Government might consider following the adoption of the clause or its revision?

Andrew Stunell: I agree with the hon. Gentleman. The matter of tariffs has bedevilled those who pioneered the technology. I visited two or three projects in the United Kingdom that have gone the whole hog in installing a system and exporting electricity. Almost without exception, they report considerable difficulties in dealing with the electricity companies and establishing a fair and proper way to take their surplus electricity. New clause 2 rightly mentions the installation and the tariff system. I strongly support the net metering concept and I hope that the Government respond favourably to that new clause.
 I want to pick up a couple of points made by the hon. Member for Milton Keynes, North-East. First, he described the symbolism of micro-generation— I would prefer to call it the cultural change—and what it can produce. It will be a powerful incentive to people to take the energy system seriously when they realise that they have some plant in their house that can generate electricity, reduce their bills and incidentally contribute to a reduction in global warming. 
 We must recognise that even a gas-fired micro-co-generation plant will raise the efficiency of combustion from approximately 70 per cent., with a reasonably efficient gas boiler, to something approaching 90 per cent. That will result in a reduction in carbon dioxide emissions and in the bills that the customer pays. It appears to be an unmitigated good, and therefore I am doubly pleased that the Government, in coming forward with this alternative clause, appear to have accepted that point as strongly as they have. We could be in the same position, in terms of energy and efficiency savings, as has already arisen through other regulatory steps such as the change to powering televisions in their stand-by mode. 
 I shall comment briefly on the dynamic-demand amendments. I do not know whether the Minister can take those matters on board at present, because all sorts of unforeseen technical issues may have to be resolved, but I would like an undertaking from him that they will be explored fully and promptly by his officials in consultation with the industry, with a view to introducing practical measures for implementation as soon as possible. 
 In that area, as with net metering, a regulatory push from the Government through legislation is needed to make the market perform and to produce the outcome that we all want. I look forward to what the Minister may have to say on that matter.

Colin Challen: I welcome you to the Chair, Mr. Gale. Despite the fact that the blinds are often drawn in this Room, I am sure that you will bring light and clarity to our proceedings.
 I also welcome the amendment that the Government have tabled, particularly as my proposals would have removed the word ''targets'' from the original clause 129. I wanted something to be saved from that clause, 
 which is vital, and it seems that there is consensus around the Room that micro-generation should become an important part of the Government's strategy. 
 My remarks will be brief, because much of the ground has already been covered. My first point concerns terminology. We refer to ''micro-generation'', but we should refer, at least in our own circles, to ''distributed generation systems'', because ''micro-generation'' might give the public at large the impression that we are discussing a small thing that makes a small contribution to the solutions that are needed to address climate change. Although ''micro-power'' and ''micro-generation'' are easy words to use, we must be careful not to convey it to the public or the industry that we do not see a great future for that way of distributing power. 
 Having said that, I note that in the past couple of months the Micropower Council was launched. That informed my view that we cannot yet talk about targets, because when an industry body is being formed as we are considering the Bill it would be premature to set targets. However, I agree with Dave Sowden, the council's acting chief executive, who said: 
 ''With the right policy framework, microgeneration can help bring about genuine consumer engagement in tackling climate change.'' 
He went on to say that this Bill and this clause 
''could be the spur to massive investment in microgeneration.'' 
I agree with both those statements, which is why I think that that the strategy—I hope we agree that it should be implemented—is so important. 
 I consider four things in the strategy significant. The first, which is mentioned in the Government's proposal, is working with the new industry body and, in particular, examining how the Government could support research and development. I was disappointed with paragraph 4.126 of the regulatory impact assessment, which states: 
 ''While this measure may lead to increased demand for certain microgeneration units and so benefit a small number of UK manufacturers (although many manufacturers are not UK companies) there is a risk that it would detract from confidence in Government assurances''. 
That is a conservative and cautious statement. The Government should be seen to support research and development, not only through the measures that they have already mentioned, but through a clear micro-generation strategy. If we had that, we could challenge that statement. Coincidentally, I came across a statement made by the Chancellor of the Exchequer to the European Scrutiny Committee on 20 April: 
 ''There is a market failure in research and development''. 
The Government must have a strategy for research and development in micro-generation. That strategy must also include the technical points that have already been mentioned, particularly by my hon. Friend the Member for Milton Keynes, North-East, such as dynamic demand management and net metering. There must be a clear steer from the Government. 
 Through the strategy we must consider how to promote micro-generation to the public. I hope that the Government work through Ministers from the Department for Environment, Food and Rural Affairs. DEFRA campaigns, such as, ''Are you doing your bit?'', would have greater cogency and purchase with the public if, as well as asking that question, they said, ''Would you like to earn some money as well?'' That would encourage people to get involved in finding solutions for climate change. 
 Development of new ownership structures in the generation industry should also be included in the strategy. Many people might think that that would be good for individual householders, as I am sure it would. However, my hon. Friend the Member for Waveney (Mr. Blizzard), the hon. Member for Hazel Grove (Mr. Stunell) and I went on the same visit to Germany a couple of years ago with the parliamentary renewable and sustainable energy group. We saw how the Germans were developing small co-operatively owned wind farms so that local communities could own a shared facility, which, if owned by only one or two people, may not be economic. 
 If we addressed the question of ownership, more people would be encouraged to withdraw objections to local wind farms. Powergen is offering a 25 per cent. inducement to consumers to support wind farms in their area. That may smack of desperation and trying to get the public involved in something that they are not happy with, but I welcome such inducements. Energy is so important to our lives; without it the economy would not exist or grow. 
 I do not see why individuals, collectives—an old-fashioned word—co-operatives or mutual ownership should not play an important part in the strategy to develop micro-generation. I thank the Government for proposing the amendment. It shows that they listen, particularly to their Back Benchers.

Robert Key: I strongly support the clause. From childhood, I have been interested in and familiar with micro-generation. In my constituency, there is an old micro-generating electricity plant on the River Avon at Heale house, which was designed in the '30s and is still in reasonable working order, though not used daily.
 I would be grateful if the Minister and his advisers pored over something curious that I have discovered. Subsection (3) of clause 194, ''Short title, commencement and extent'', states: 
 ''Subject to subsection (4) of this section, this Act extends to Northern Ireland.'' 
Subsection (4) lists the provisions that do not extend to Northern Ireland and does not include clause 129. Therefore, the clause extends to Northern Ireland. However, the Government's proposed amendment specifically states that the provision refers only to Great Britain. Is that an administrative oversight, a cock-up or a serious change of policy?

Michael Weir: I mentioned microgeneration when we were discussing CHP. It is could benefit many rural and remote communities,
 and there is increasing interest it as an alternative in many parts of Scotland. I agree with the hon. Member for Morley and Rothwell (Mr. Challen) about co-operative ownership—he must be the first Government MP in a long time to call for a degree of collectivisation.
 I have a couple of queries about the clause. I do not agree with the hon. Gentleman about targets. The main difference between clause 129 as drafted and the amended version to which, we are told, we can look forward on Report, is the deletion of subsections (4) and (5). Those state: 
 ''(4) The strategy shall include such targets for the generation of energy by microgeneration as in the opinion of the Secretary of State are practicable and cost effective. 
 (5) It shall be the duty of the Secretary of State to take reasonable steps to— 
 (a) implement the strategy, and 
 (b) ensure that any targets included in the strategy are met.'' 
The revised clause would water down that down, stating that the Secretary of State must take reasonable steps to secure the implementation of the strategy in the form in which it has most recently been published. Any reference to targets completely vanishes. We seem to be returning to the debate in the Committee's first sitting, when targets in relation to carbon were removed from the Bill. The same arguments apply in the present case. It is all very well having a strategy for microgeneration, but if there is no benchmark by which to measure its success, can any meaningful progress be made? 
 I appreciate what the hon. Gentleman said about the association having just been formed, but we are talking about a strategy under a new clause that is 18 months from being published. We are in danger of having a completely meaningless strategy, because there are no targets in it and there is no obligation on the Secretary of State.

Colin Challen: Does the hon. Gentleman recognise that in those 18 months we could work with the brand new industry body to work out what is needed? If we set targets straight away but do not have the indigenous industry to deliver them, will not we merely suck in exports from elsewhere? Does he really think that is a good idea?

Michael Weir: No, I do not think that is necessarily the case. We are 18 months away from the publication of a strategy and the targets, whatever they may be—the clause as it stands does not say what they are—could start modestly and build up, but at least they would be a benchmark against which to measure the strategy. At present, it is meaningless. There is no duty on the Secretary of State to implement the strategy: under the new clause, his or her duty is to secure implementation—a different form of words that may well mean that the Secretary of State gets out of any obligation to do much about the strategy. Although I welcome the fact that the Government have moved to some degree in that they are willing to consider a strategy, I fear that under the amended clause we will have a strategy without any teeth. Clause 129 is slightly better, although not perfect.

Anne McIntosh: I warmly welcome you to the Chair, Mr. Gale. It is a pleasure to serve under your chairmanship.
 I refer the Minister to his Department's earlier renewables obligation preliminary consultation, which was published under a former Secretary of State for Trade and Industry, the right hon. Member for Tyneside, North (Mr. Byers). That shows how long ago it was. The document is silent on the subject of microgeneration; I wonder if that shows how much the Minister is committed to it. Was it was a deliberate omission from the consultation? 
 Although he had not managed to draft an amendment, the Under-Secretary felt that it was justified to leave clauses 100 and 101 clauses in the Bill until Report. I have not had an opportunity to read through the amendment that has been thrust before us unofficially this afternoon, or to consult relevant partners in the industry on it. I therefore argue that although it is helpful, as other hon. Members have said, to have sight of the proposed revised clause, the clause 129 should remain part of the Bill as it stands, at least until Report.

Andrew Stunell: Does the hon. Lady agree that there is a risk of losing the bird in the hand in favour of the two in the bush that might fly away before we reach Report?

Anne McIntosh: Indeed. Without bringing our feathered friends into this, I would greatly prefer to leave clause 129 in the Bill. I pay tribute to the hon. Gentleman's noble Friend in the other place who did the groundwork, with support from my noble Friends, to secure it. Removing the clause, which has enjoyed a great deal of support, would be regrettable.
 What discussions has the Minister had with that relatively new industry body, the Micropower Council, which was launched in London on 23 April. It has introduced an action plan to encourage consumers to recognise the energy efficiency benefits of microgeneration in the domestic setting. The Minister risks causing a great deal of upset among the relevant industry bodies. There are huge benefits from microgeneration. I shall not rehearse them all here, but they relate to CO2 reduction, securing a safe supply, security and reliability in terms of adequate and affordable home heating and, in relation to the employment market and industry, ensuring the competitiveness of the UK. 
 This morning, the hon. Member for Milton Keynes, North-East expressed dismay that every time a member of the Committee made a suggestion, the Minister said that we should wait until the review in 2005-06. I humbly submit that clause 129 is an extremely helpful addition to the Bill, and I oppose its removal at this stage. I think that the Minister will accept that his draft is deficient in certain aspects, because it will remove certain aspects of the original clause. 
 Clause 129 is also important for the campaign for warm homes—which has been very successful—and would contribute to domestic as well as industrial energy efficiency. I imagine that a number of small businesses and households would benefit from it.

Nigel Griffiths: I, too, welcome you to the Chair, Mr. Gale. The hon. Member for Vale of York (Miss McIntosh) put a question to me directly, and I shall answer it directly. She asked me what the Government's commitment was to microgeneration. Our commitment is £35 million through funding the major photovoltaics demonstration programme and the clear skies initiative, which provides grants towards the cost of residential and community renewables projects. That £35 million commitment is to a Labour Government programme; that programme did not exist before. I am pleased that she has given me an opportunity to spell out the present Government's commitment and to contrast it with the Conservative Government's lack of commitment.
 I have no doubt that microgeneration has an important part to play in reducing greenhouse gas emissions. The distributed generation co-ordination group established by the DTI and Ofgem is considering the integration of microgeneration. We recently legislated to make it easier for small renewables generating stations to receive renewables obligation certificates, and I am sure that the new body that the hon. Lady mentioned warmly welcomed that. The Committee will be keen to know that the micro-CHP trials are under way, under the low carbon innovation programme, with the co-operation of the Carbon Trust, again in partnership with the Energy Saving Trust. I pay tribute to the Energy Saving Trust and all the work that it is doing to help us to achieve a wider use of microgeneration. The Committee will also be pleased to know that the Chancellor announced in the Budget that VAT might be reduced for micro-CHP in 2005. I am sure that he will welcome detailed representations from hon. Members and others before then. 
 Clause 129 would, as has been said, impose on the Secretary of State a duty to draw up a microgeneration strategy and to set relevant targets. I have some detailed concerns about the clause. It needs to establish the purpose of a strategy rather more clearly—it is feared that the references to new and renewable sources of energy are confusing. Careful consideration should be given to the definition of microgeneration in order to ensure that any strategy has a clear scope. Those issues can be addressed through drafting. 
 Although it is widely agreed that there should be a clause to highlight the benefits of microgeneration, there are fundamental problems with one aspect of the clause added by their lordships: the requirement for the strategy to include targets. The objections to that have clear foundation. A specific target for small-scale generation of electricity could cut unhelpfully across other commitments in the White Paper, because 
 microgeneration incorporates micro-CHP and small-scale generation from renewables, and renewable energy and CHP are already the subjects of separate targets. The principle of targets has been accepted in a number of areas relating to generation, but the nature of generation means that the setting of further targets in areas for which targets have already been set might cause confusion. 
 A clear strategy for microgeneration has benefits, and legislation is not required to achieve them. However, to the extent that a legal duty to establish a strategy would give the industry and potential investors confidence, we are prepared to look at the clause with the intention of proposing an amended version on Report. One has been drafted so that everybody has the opportunity to study it before that stage. 
 Amendments Nos. 212, 213 and 214 would remove the need for the Secretary of State to set targets for microgeneration. However, I am advised that they do not address some of the other technical difficulties with the clause as drafted. I hope that my hon. Friend the Member for Morley and Rothwell will consider not pressing the amendment. 
 Amendments 200 to 205 would require the microgeneration strategy to consider dynamic demand control. That is only one of a number of issues that could be covered by the strategy. There is a reluctance to specify in legislation every issue that might be considered by a strategy, and that is not felt to be necessary at this stage. There is also concern that by specifying some of the issues to be considered, it might seem as though other equally relevant issues will be overlooked or downgraded.

Brian White: Accepting that the issue does not need to be in the Bill, will the Minister assure us that the Department will look at it and promote it as one small part of the strategy?

Nigel Griffiths: I do not have any hesitation in repeating my opening sentiments. The Department of Trade and Industry recognises the importance of microgeneration, and because it cuts across other Government-supported programmes it is an issue and must be an integral part of our thinking in developing a strategy. I hope that that reassures my hon. Friend and I am grateful to him for highlighting the key microgeneration issues so articulately.

Andrew Stunell: On the issue of dynamic demand control, I am sure that the Minister recognises that that is not limited to microgeneration in homes or premises. It could apply to everybody's home as soon as they buy a new fridge. We are talking about an issue with a potentially wider application, and therefore greater impact sooner. I hope that he follows through on the remarks he has made so far.

Nigel Griffiths: Yes, I certainly believe that it is important to explore the role of dynamic demand management as part of the strategy. I am happy to give that commitment. We are actively considering the
 complete role, and there will certainly be an opportunity during the consultation period to consider when dynamic demand management will play a role and how it can play a role in meeting our carbon reduction aims. I am grateful to the hon. Gentleman for raising that point and allowing me to set out the Government's position clearly.
 New clause 2 intends to ensure that microgenerating capacities exporting renewable electricity to the local distribution network have net metering facilities made available by their supplier. I am advised that if legislation required electricity suppliers to pay the same price for electricity as that at which they sell electricity, they would in effect be required to buy the product at a price above that obtainable elsewhere. That has serious implications for other electricity consumers and whether they will be willing to bear the additional costs. 
 We are keen to ensure that all small-scale generation is treated equitably and receives full value for the electricity it exports. However, if net metering allows electricity exports from customers' homes to be rewarded at the price at which electricity is imported, there will be concern that it is economically unsound and will undermine the arguments for promoting such electricity generation. 
 Another problem with net metering is that it does not recognise the time-varying nature of electricity value, which is much higher in the peak hours than in the middle of the night when demand is lower. Net metering appears to take no account of that, effectively pricing power used at midnight at the same level as power used at peak time. Several electricity suppliers have offered a limited deal on net metering, often for electricity from solar energy or photovoltaics. I strongly support that—as, I am sure, do all hon. Members—and I want to encourage other suppliers to follow that lead, but it is one thing to encourage voluntary development and quite another to make it compulsory, given the uncertainties and problems that I have outlined. 
 The amendment could impose an unprofitable or loss-making requirement on companies supplying electricity to certain households. This whole area needs to be explored and debated in more detail before we can accept such an amendment. I urge hon. Members not to press the amendments or new clause 2, and I propose that clause 129 should not stand part of the Bill.

Brian White: In my haste to move the amendment, I passed over my notes on new clause 2, so I am indebted to the hon. Member for Hazel Grove for making the case that I should have made and which I signally failed to do. However, I will take up the Minister's comments on net metering and enlighten him, after the sitting, as to why some fears on which his arguments are based are unjustified.
 On clause 129, I welcome the Minister's commitment regarding the draft clause, which it would be helpful to see. It is important to recognise that the coalescing series of small changes could bring the necessary cultural change. 
 In seeking to withdraw my amendment, I make a plea to the Minister that this should not become another missed opportunity.

Robert Key: The hon. Gentleman may have noted that I made a serious point about Northern Ireland, but that it seems to have slipped the Minister's mind. Will he be so kind as to invite the Minister to answer?

Brian White: If the Minister wishes to intervene, I am happy to give way.

Nigel Griffiths: I am grateful for the opportunity to respond. I meant no discourtesy and I apologise for not covering that point in what was rather a dense brief. The hon. Member for Salisbury (Mr. Key) asked whether the measure will extend to Northern Ireland. When we bring back the revised clause on Report, we will amend clause 194 to clarify the fact that it does not apply to Northern Ireland. It does not apply because this is a devolved issue. We have discussed the matter with our Northern Irish colleagues and kept them informed of our strategy.

Brian White: As I was saying, I make a plea to the Minister that this does not become another missed opportunity. This morning, I mentioned that micro-CHP has been put on hold by British Gas. There are tremendous opportunities for the Department for International Development and developing countries, as well as for our industry and manufacturing base, and I urge the Minister to recognise that fact when he introduces the revised clause on Report. However, I will pursue the matter outside the Committee and enlighten him on why microgeneration does not hold the fears that he articulated. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question put, That the clause stand part of the Bill:—
The Committee divided: Ayes 6, Noes 12.

Question accordingly negatived. 
 Clause 129 disagreed to.

Clause 130 - ''New trading and transmission arrangements''

Question proposed, That the clause stand part of the Bill.

Anne McIntosh: I want to question the Minister briefly on the application of the measure to Scotland. I understand that concern has been raised about the implications of the forced sale of the Government's golden share in BAA plc. I understand that golden shares are held in two Scottish companies Scottish and Southern Energy, and Scottish Power. Is he aware of whether there would be implications if a similar action were brought before the Competition Commission or the European Court of Justice?
 I misread the helpful Library note that relates to the application of this clause to Scotland. It was rather alarming on the state of household bills in Scotland. I thought that it said that hills had been lowered in Scotland at a lesser rate than in England. In fact, it said that household bills had decreased at a lower rate in Scotland than in England and Wales. I am sure that the Minister, representing the constituency that he does, will be alarmed that the liberalisation and the new arrangements have not percolated through to Scotland as quickly as to England and Wales. Perhaps he can explain, in the context of the clause, how that advantage to Scotland will be extended more quickly.

Nigel Griffiths: Let me deal with the hon. Lady's point. The British electricity trading and transmission arrangements will create a single wholesale electricity market for Great Britain, which will have a single transmission system operator that is independent of any interests in generation and in supply. This is based on the arrangements that prevail in England and Wales. They formed the basis for consultation and seem to have served both business and domestic consumers well.
 The clause defines what is meant by new trading and transmission arrangements—a phrase used in clauses 131, 134 and 136—and limits the powers given to the Secretary of State. I hope that that explanation of the position in England and Wales—we believe that it should be the position throughout the United Kingdom—is adequate for hon. Members. 
 Question put and agreed to. 
 Clause 130 ordered to stand part of the Bill. 
 Clauses 131 and 132 ordered to stand part of the Bill.

Clause 133 - Transmission licences

Andrew Stunell: I beg to move amendment No. 215, in
clause 133, page 104, line 38, at end insert—
 '(1A) After subsection (2) of that section insert—
 ''(2A) The same person may not be the holder of both a transmission licence in which the conditions relating to the carrying out of the system operator function by such person are in force and a transmission licence in which the conditions relating to the carrying out of the system provider function by such person are in force. For the avoidance of doubt, a holding company and the subsidiaries of that holding company (as such expressions are defined in section 736 of the Companies Act 1985) shall be regarded, for the purposes of this section, as different persons.
 (2B) The holder of a transmission licence shall not, except to the extent permitted by or under such licence in respect of ancillary or incidental activities, conduct any business or carry out any activity other than that of participating in the transmission of electricity.''.'.

Roger Gale: With this it will be convenient to discuss the following:
 Amendment No. 216, in 
clause 133, page 105, line 11, at end add— 
 '(2B) Without prejudice to the generality of paragraph (a) of subsection (1), conditions included in a transmission licence by virtue of that paragraph may include such provision in a licence to give effect to section 6(2B) as appear to the Authority to be necessary or expedient.'. 
Amendment No. 217, in 
clause 139, page 107, line 5, at end insert— 
 '''system operator'' means a person engaged in the activity described in section 4(3A)(a) of the 1989 Act; 
 ''system provider'' means a person engaged in the activity described in section 4(3A)(b) of the 1989 Act; and'.

Andrew Stunell: We are moving into a somewhat technical area in which one needs to have either a thick anorak or a great deal of time to understand the issues.
 The clause relates to the issuing of transmission licences. The worry that my hon. Friends and I have about the clause is that potentially it puts a good deal of power and leverage in the hands of the system operator, which is essentially, at the moment, the National Grid Company. The purpose of the amendment is to say that a transmission licence cannot be issued to somebody who is, at the same time, the system operator. It is designed to ensure that the strong leverage that could be operated by the NGC, or by some other company with the system operator function, is inhibited or limited and cannot under any circumstances hold the system to ransom. 
 I should say by way of introduction that in response to the hon. Member for Vale of York in the clause 130 debate, the Minister somewhat skated over the controversial and difficult background that NETA has had in England and Wales. By implication, he suggested that everything was for the best in the best of all possible worlds, and all we needed to do was join Scotland and everything would be fine. For NETA, everything is not for the best in the best of all possible worlds. It has required constant tweaking and has created a large number of problems for operators at both ends of the grid. The Minister will say that NETA has led to a substantial reduction in prices. I certainly would not deny that, although not all of those price reductions have been passed on to consumers, as one might have expected if the market were working as well as Ministers have sometimes stated. 
 In extending the BETTA system to Scotland, it is important not to build in potential weaknesses; in particular, it is important to avoid a situation in which one operator—or the operator of one particular function, which is the systems operator—does not get unreasonable power or leverage within the system. That is the purpose of amendment No. 215, which states that the same person may not be both the holder of a transmission licence as a system operator and the provider in the general sense. 
 I will be interested to hear what the Minister has to say about the amendment. I hope that he will not pretend that there is no issue to address. I am prepared for him to say that there may be deficiencies and all the usual difficulties that occur when the Opposition draft amendments. However, I hope that he will not minimise the risk that a systems operator might gain unreasonable leverage over the way in which the whole transmission network operates. My hon. Friend the Member for Lewes (Norman Baker) and I have proposed the two amendments to explore the issue and to hear the Minister's assurances that our fears will be appropriately addressed on Report.

Anne McIntosh: I have followed with interest the words of the hon. Member for Hazel Grove. I was also disappointed that the Minister made light of the difficulties experienced with the introduction of NETA. To support my argument, I pray in aid the National Audit Office report, which damningly concluded:
 ''The market based NETA arrangements are more costly than the central Pool arrangements.'' 
It continued: 
 ''There is a continuing though reduced risk that participants in NETA may manipulate prices to their advantage.'' 
 It also stated: 
 ''Ofgem make their regulatory decisions transparent and this will continue to be a vital part of their work.'' 
The NAO put forward a positive conclusion in seeing the need for continued regulation, and the report firmly recommended that Ofgem should continue to review why domestic consumers who have not switched supplier have benefited much less from falling wholesale prices. Indeed, a number of other conclusions support the argument of the hon. Member for Hazel Grove. 
 Although the Vale of York, which I represent, does not contain many hills or mountains—as the name suggests—I must point out that, in common with Scotland, the rest of the county, which is the largest in the country, has hills. According to the Library note, bills north of the border have not fallen by as much as those in England and Wales. It is curious that bills have fallen faster in Wales than in Scotland, since Wales is also a mountainous and hilly region. Perhaps the Minister has an explanation for that that has escaped me. The high cost of distribution in Scotland is a significant factor. If that is a concern for the Minister, what does he propose to do about it? 
 The Minister will be only too aware of my hostility to overhead line transmission, an issue that north Yorkshire and Scotland share. We are told that it is too expensive for lines to go underground where there are hills. Oil companies, such as BP, managed to put ethanol pipes underground while the overhead line was going up. Since they were covering a similar route, it was curious that electricity lines could not have been laid at the same time as a pipeline carrying ethanol. It can be done if there is the will to do so. 
 I do not support the whole thrust of the amendments from the hon. Member for Hazel Grove, but he raised interesting issues. The Minister would do well to respond to the concerns raised in the NAO's report.

Nigel Griffiths: Let us examine some facts. Both the system operator and the transmission owner functions are already monopoly activities and, as such, are subject to heavy regulatory oversight. Ofgem has given detailed consideration to that. It believes that the National Grid Company has made significant savings by making use of the synergies available by undertaking the system operator and transmission owner functions together. Indeed, the NGC calculates that, during the past nine years, that measure has benefited electricity consumers to the tune of some £55 million a year. The regulator has successfully made incentives part of the price control regime for NGC, which has brought further significant benefits.
 It would be much harder properly to incentivise a company or division of a company that simply operated the networks but owned no assets. We need to be careful about putting at risk arrangements that have proved to be very successful in improving efficiency and that have ensured cost savings to customers. We are aware of concern about the possible discrimination against transmission owners not owned by the NGC. Non-discrimination will be addressed explicitly in a licence condition in NGC's licence. 
 Ofgem and the DTI are advancing proposals for further targeted regulatory arrangements to ring-fence the information submitted by other transmission licensees when preparing their own connection offer. That is another concern that has been voiced to and by hon. Members, and I hope that what I have said is evidence that we are addressing that. A draft text for consultation is being produced and I hope that it will be available shortly. Both Ofgem and the DTI firmly believe that the best way to address concerns about discrimination is through licence conditions, which is why we reject the amendments. 
 Hon. Members voiced concerns about NETA that I would have been happy to address if they had pressed me. However, they sat down and said nothing, so I am glad to have the opportunity to respond and to prove that there is no complacency. The pool mechanism was a price-setting mechanism that was open to price manipulation by significant players, and it hid overcapacity in the market and the significant decrease in wholesale electricity prices following the introduction of the new regulatory regime. The introduction of NETA was the market response to that overcapacity. I am sure that hon. Members will accept that NETA has benefited consumers, which is the point that I sought to make in connection with another clause. I hope that I have clarified that point and persuaded the hon. Gentleman to withdraw the amendment.

Anne McIntosh: The Minister does not seem to have responded to my comment about the higher distribution costs of electricity. Does he believe that those costs have anything to do with the fact that no single company in England owns more than 20 per
 cent. of capacity, but that the capacity in Scotland is largely in the hands of Scottish Power and Scottish and Southern Energy? Is not the effect on prices compounded by the difference in the market?

Nigel Griffiths: Yes.

Andrew Stunell: The Minister has made a robust defence, but it is not as solid as he made it sound. As he knows, the prices came down before NETA came into operation, no doubt in prospect of NETA's introduction. I notice that the £55 million saving is an NGC estimate. I am not disputing either of those facts. I am simply pointing out that we have created a monopoly, as the Minister very fairly said, which can be kept in check only by legislation along the lines that my hon. Friend the Member for Lewes and I have put forward today or by very firm regulation.
 Two potential problems have been pointed out—two of the mechanisms by which the leverage that I spoke of might become effective. One would be discrimination by the NGC or the system operator for new entrants who were taking up transmission licences. It is some comfort to know that the Minister has recognised that and that Ofgem will keep an eye on the situation, but it shows the need for vigilance and for a firm approach by the regulator to the question of the abuses that might arise. 
 I think that I understood the Minister to say that he was also consulting on what I might interpret as Chinese walls in the matter of provision of information by potential licensees, to prevent information from being transmitted to the NGC or the system operator if it might subsequently be used to the disadvantage of the incoming transmission operator. That is of some comfort, but the very fact that those issues must be dealt with is a clear signal that we are setting up a potentially risky situation, in which there is scope for an operator to abuse the power that the transmission licences will afford. 
 Nevertheless, having explained our concerns and heard something from the Minister about the action that he intends Ofgem to take to safeguard the system from the abuses that we have identified, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Anne Picking (East Lothian) (Lab): I beg to move amendment No. 93, in 
clause 133, page 105, line 11, at end add—
 '(4) In section 7 (licence conditions: general), after subsection (3A) insert—
 ''(3B) Conditions included in a transmission licence by virtue of subsection (1)(a) shall require the holder to—
(a) maintain accounting and reporting arrangements which enable accounts to be prepared, and
(b) prepare and submit to GEMA, on an annual basis, accounts,
for the business engaging in that activity so that the revenues, costs, assets, liabilities, reserves and provisions of, or reasonably attributable to, the business engaging in that activity are separately identifiable from those of any other business of the transmission licence holder.''.'.
 I shall be relatively brief and not delay proceedings, because I am one of those Scots who want to support the British team. 
 Amendment No. 93 would add to clause 133 by placing a duty on a company undertaking the role of independent GB system operator to publish separate regulatory accounts for its transmission-owning business. One of the key principles supporting BETTA is the introduction of an independent operator to ensure that all generators participating in the UK market are treated equally. The Government have also already indicated that they are minded to appoint the NGC, currently the UK's largest transmission operator, as the GB system operator. 
 That is not necessarily a problem. As the largest transmission operator, the NGC clearly has the skills necessary to operate the market and in terms of fair access to the network for generators it has no conflict of interest as it does not own any generation capacity. However, it is also important to bear in mind that that the GB system operator will have a unique and monopolistic role in the new market, and although it may be independent of generators and suppliers, it is obviously not independent of all transmission licensees. Therefore, it is vital that there is sufficient transparency between the NGC, as the GB system operator, and the NGC as a transmission owner. 
 It is worth noting that, in examining the draft Electricity (Trading and Transmission) Bill, the Trade and Industry Committee picked up that very point, stating: 
 ''We agree that it will be essential to clearly distinguish the roles of the system operator and transmission owner and to ensure that NGC in its role of system operator acts independently of the company's interests as a transmission asset owner.'' 
Scottish Power, one of the other two transmission owners, has expressed concern to me that sufficient transparency does not exist within the current proposals. There is thus potential for the GB system operator to discriminate against Scottish Power or Scottish Hydro-Electric in favour of its own transmission business. My amendment would provide that degree of transparency by ensuring that the National Grid Company's transmission business would have to publish separate regulatory accounts from the GB system operator.

Calum MacDonald: I would like to add a brief word of support to my hon. Friend's amendment. I, too, have had the benefit of the briefing from Scottish Power, in which the concern was expressed that the twin roles of operator and owner of the system were insufficiently distinguished in the current legislative arrangements. Scottish Power made the fair point that it currently occupies the same dual role—it is operator and owner of a large part of the system in Scotland, as is Scottish and Southern Energy Group. However, whereas in Scotland, such
 companies are currently required to publish separate accounts for each part of the business, that will not be required of the National Grid Company.
 Scottish Power said that publishing the separate accounts, as it is currently required to do, is a fairly simple operation, and does not cost much in additional personnel or work time. However, it gives everyone the confidence that the two roles are being carried out properly and that there is sufficient transparency for other system owners to know that the system is operating properly. Given that publication of separate accounts engenders that greater confidence and transparency, and that it is not costly to carry out, it seems that Scottish Power makes a fair point in asking the Government to examine the matter. I hope that the Minister will respond positively to Scottish Power's concerns.

Andrew Stunell: Obviously, in the light of the amendments that I moved before, I am happy to support the amendment under discussion. It is more modest in its directing effect, but creates greater transparency, which I believe is of great importance. In extending NETA to Scotland and creating a new system, we should at least not make worse the reporting requirements that currently exist for the Scottish transmission and system operators, so that there is no loss of transparency, which would be the effect of the legislation as currently drafted.

Paddy Tipping: During discussion of the previous group of amendments, the hon. Gentleman suggested that we needed thick anoraks, but he now tells us that we need more modest anoraks. However, what we actually need are transparent anoraks. I have much sympathy with the points made by all hon. Members during the debate. The amendment would require the systems operator—the NGC—to prepare its accounts in a different way, so that the transmission costs are separated from the ownership costs—[Interruption.]

Roger Gale: Order. I have been as patient as I can. If hon. Members wish to have a private conversation, will they please leave the Room and have it outside?

Paddy Tipping: If the accounts were prepared in that way, they would separate the costs of running the systems from the asset costs. That would put no great onus or responsibilities on the operator, but would bring greater transparency and trust to the system. The Department is well aware of the issue—the Minister, in a previous discussion, talked about the licences that were to be introduced. It is important that the Minister gives us an assurance about the transparency that we all seek.

Nigel Griffiths: I hope that I will be able to do so. My hon. Friend the Member for East Lothian (Anne Picking) set out clearly the rationale behind the amendment. However, I preface my remarks by saying that the position in Scotland was always different. Scottish Power, through its commercial operations, chose to establish and publish separate accounts. It is not required to do so for its system operator,
 transmission owner roles; it publishes separate accounts when it has businesses that require different licences—transmission and distribution. However, having set up publishing mechanisms at an earlier stage, it is not as simple as saying that it must be easy for others to do so. I appreciate that there must be transparency, which is important. Whether it has given companies in Scotland the ability—I choose my words carefully—to make more money, I will not say. Certainly, higher prices have been reflected in those practices. Therefore when people pray in aid the practices in Scotland, I treat them on the basis of the evidence, which is that the consumers have apparently not benefited as much as they have in other parts of the country.
 As hon. Members have stressed repeatedly, it is a heavily regulated area, and Scottish Power has been one of the most vociferous complainants about the regulation, so it cannot be all wrong. Ofgem closely monitors those areas where it is felt that the consumer might at first be taken advantage of. I recognise the genuineness of the arguments, but I am not convinced that the benefit to customers of accepting the requirement in the amendment would outweigh the bureaucracy involved. 
 Ofgem, spurred on by the NAO and the excellent work done by the Trade and Industry Committee, is keeping these matters under constant review. I am advised that the potential bureaucracy in the proposal is outweighed by the fact that enough mechanisms are already in place to ensure that consumers are protected.

Paddy Tipping: The Minister prayed in aid the Trade and Industry Committee. In its last report on the issue, the Select Committee recommended the course of action that we advocate.

Nigel Griffiths: I listened to my hon. Friend's earlier summary of the Trade and Industry Committee's report. I am advised that the report stated that if properly drafted, the licence conditions and the industry code—I understand it is in draft— should be sufficient to achieve the appropriate degree of separation. Obviously, the Department of Trade and Industry examined the Select Committee's evidence in detail when available and the conclusion has been reached that the amendment would not bring better safeguards to companies, at a proportionate cost, despite the briefing of Scottish Power, the genuine views of hon. Members and the evidence taken by the Select Committee.

Andrew Stunell: Perhaps it would help the Minister if I read out the Trade and Industry Committee's response to the Government's response:
 ''We stressed that the GB transmission System Operator (GBSO) should act independently, not only from electricity generators and suppliers but also from transmission owners. Such explicit legal separation of these interests will be necessary especially if, as expected, the owner of the transmission system . . . the National Grid Company, is appointed as GB system operator.''
Does he acknowledge that that Committee accepts that NGC will be the system operator, but makes it clear that there should be an explicit legal separation? Should not the accounts, therefore, be separated as well?

Nigel Griffiths: Ofgem investigated the recommendation and the concerns voiced by Scottish Power. I am advised that it was unable to locate sufficient evidence to justify either setting a licensing condition that would require the GBSO—NGC—to submit separate accounts or breaking NGC into separate companies. The regulator, having looked at the matter, and being aware of the concerns and taking them seriously, does not accept the logic of the hon. Gentleman's case. We are confident that Ofgem maintains a review of these matters and would not hesitate to recommend action if it felt that necessary. It has not found evidence of a need to take action in that area. On that basis, I urge the Committee not to accept amendment No. 93.

Anne Picking: With those tenuous reassurances, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 133 ordered to stand part of the Bill. 
 Clauses 134 and 135 ordered to stand part of the Bill. 
 Schedule 17 agreed to. 
 Clause 136 ordered to stand part of the Bill.

Clause 137 - Duties to provide information etc. to Secretary of State

Question proposed, That the clause stand part of the Bill.

Anne McIntosh: I would appreciate a little more information from the Minister as to how the measure will apply. We are mindful of the fact that there is an effective duopoly in Scotland, if not a monopoly, but I understand that a merger was mooted at one stage and might be back on the table once the Bill leaves the House.
 Against that background, I want to draw the Minister on the Government's responsibilities under the European electricity and gas directives as well as the European regulation on cross-border trade in electricity. I understand that political agreement was reached at the Energy Council on 25 November 2002, so I therefore assume that those measures are now part of European law and have been incorporated within the legal systems of Scotland, England and Wales. 
 The directives require independent regulation; transparent, non-discriminatory access to infrastructure; the unbundling of vertically integrated monopolies; and that all consumers choose their electricity and gas suppliers by July 2007. I commend the Government's performance in certain respects—they are actually ahead—and we have a much more 
 liberalised market than other member states. Let me express my enthusiasm for these European provisions, but not too loudly in case I wake my hon. Friend the Member for Tewkesbury. 
 Many companies in Britain, not just Scottish ones, will benefit from the further liberalisation of the energy market. I hope that the Government pursue that, although I hope also that the Minister will remember that I am not minded to have a European input on security of supply. However, there is a big role for liberalisation and for the Commission, and I hope that the Government push the Commission and the Council of Ministers in that regard. 
 I want to draw the Minister out on the unbundling of vertically integrated monopolies. Does he think the duopoly and potential monopoly in Scotland will require the Government to unbundle the present arrangements? The Government have accepted that prices are higher as there is less competition in Scotland. Looking forward, what duties does he think the Gas and Electricity Markets Authority will have to provide the Secretary of State with that information? Does he believe that the European legislation to which I have referred will apply under the clause?

Nigel Griffiths: If that legislation does not apply, I will write to the hon. Lady and other members of the Committee. I am glad it has been acknowledged that we are in pole position in terms of the European directive, which we shall probably be in a better position to implement than anyone else. If a detailed note on how we are implementing it is required I can provide it, but I do not think that one is.
 In the furtherance of openness and ensuring that details are completed, the clause requires GEMA to provide the Secretary of State with a copy of any application it receives for a transmissions licence under clause 136. Clause 137 requires GEMA and any holder of an electricity licence under the Electricity Act 1989 to provide the Secretary of State with information required to carry out any of her or his functions under chapter 1. Subsection (4) states: 
 ''Section 105(1) of the Utilities Act 2000 . . . (general restrictions on disclosure of information) does not apply to a disclosure made in pursuance of this section.'' 
BETTA was introduced so that all generators and suppliers would have access to the transmission system on equal terms. Scotland will be compliant after BETTA and so will not require, one would hope, any further intervention. I hope that that satisfies the hon. Member for Vale of York.

Anne McIntosh: Is the Minister minded to respond to my question about the duopoly? There is an extant duopoly, consisting of two power companies in Scotland. It is a matter of record that there was a proposal for a merger between them and that GEMA administers prices in Scotland. Could European legislation be interpreted under the clause to the effect that such a vertically integrated duopoly—or monopoly, were that to exist—has to be unbundled?

Nigel Griffiths: I am advised that further unbundling will not be required.
 Question put and agreed to. 
 Clause 137 ordered to stand part of the Bill. 
 Clause 138 ordered to stand part of the Bill. 
 Schedule 18 agreed to. 
 Clauses 139 and 140 ordered to stand part of the Bill. 
 Schedule 19 agreed to. 
 Clauses 141 to 143 ordered to stand part of the Bill.

Clause 144 - Consequential amendments of the 1989 Act

Amendment made: No. 190, in 
clause 144, page 109, line 31, leave out paragraph (a). —[Mr. Challen.] 
 Clause 144, as amended, ordered to stand part of the Bill. 
 Clauses 145 to 153 ordered to stand part of the Bill.

Clause 154 - Powers of court

Question proposed, That the clause stand part of the Bill.

Laurence Robertson: We are discussing applications for energy administration orders. Under subsection (2)(a) to (c), the Government have three grounds for taking over a company—that it cannot pay its debts; that it is likely not to be able to pay its debts; or that
''it would be just and equitable . . . to wind up the company in the public interest.'' 
The latter is a wide-ranging provision. Will the Minister explain how that fits with the other provisions of the clause, which is about companies going into liquidation or administration? 
 The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms): I am pleased that you are chairing our deliberations this afternoon, Mr. Gale.
 The clause sets out the powers of the court when hearing an application for an energy administration order. An application may be made by the Secretary of State or, with her consent, by Ofgem. The court may make the order only if it is satisfied that one of three situations applies, each of which is taken from existing insolvency law. First, the company must be unable to pay its debts. Secondly, it is likely to be unable to do so—that is, it is facing insolvency. Thirdly, on the point raised by the hon. Gentleman, the company could be wound up in the public interest on petition by the Secretary of State under section 124A of the Insolvency Act 1986. 
 The third situation is tied back to existing powers in the Insolvency Act that allow the Secretary of State to wind up a company if it is in the public interest to do so. Section 124A applies if a company is being investigated under various pieces of legislation, including the Financial Services and Markets Act 2000, the Companies Act and the Criminal Justice Act 1987. When it is expedient and in the public interest, the Secretary of State may seek a winding-up order in respect of the company if it is just and equitable to do so. However, if the company in question is a protected energy company, that could lead to an interruption in supply. The provisions will therefore allow the Secretary of State, in situations of that kind, to apply for an energy administration order instead of a winding-up order. The purpose is to protect the public interest. 
 Question put and agreed to. 
 Clause 154 ordered to stand part of the Bill. 
 Clauses 155 and 156 ordered to stand part of the Bill. 
Further consideration adjourned.—[Charlotte Atkins.] 
 Adjourned accordingly at fourteen minutes past Four o'clock till Tuesday 22 June at five minutes to Nine o'clock.